SEC Reminds Two Robo-Advisors That Revolutionary Technology and Business Plans Do Not Change Need For Robust Adviser Act Compliance Program
On December 21, 2018, the Securities and Exchange Commission (“SEC”) announced, in a first-of-its-kind action against robo-advisers, that it instituted settled proceedings against Wealthfront Advisers LLC and Hedgeable Inc. for making false statements about investment products and publishing misleading advertising.
Wealthfront, one of the nation’s largest robo-advisers, was fined $250,000 for improperly implementing and supervising its Tax Loss Harvesting service and for improperly implementing its advertising compliance program. Hedgeable, which withdrew its investment adviser registration in September, was fined $80,000 for not properly presenting performance data and for falsely claiming its outperformance of competitors.
SEC Press Release re Wealthfront, Hedgeable.12-21-2018
SEC Order Wealthfront.12-21-2018
SEC Order Hedgeable.12-21-2018
SEC Investor Bulletin: Robo-Advisers
SEC 2019 Exam Priorities and FINRA Investor Alert Eye Cryptocurrencies
On Thursday, December 20, 2018, the SEC Office of Compliance Inspections and Examinations (“OCIE”) announced its 2019 Examination Priorities, which include a focus by SEC examiners on digital asset market participants - whether broker dealers, investment advisers, or trading platforms. Where the products being offered, traded, or managed are securities, the SEC will examine for regulatory compliance.
In a related posting by FINRA Staff on November 30, 2018, Storing and Securing Cryptocurrencies, FINRA continues its series of articles on the emerging world of digital assets exploring Initial Coin Offerings, digital tokens, the virtual currency regulatory landscape, and tips for investors and market participants alike to avoid fraud and scams.
SEC Office of Compliance Inspections Press Release.12-20-2018
2019 SEC Exam Priorities
FINRA Investor Alert - Cryptocurrencies